Union Exemption From Excise Tax Is a Bad, Bad Idea

Jane Hamsher explained last night that unions have a tentative deal for a way out of the excise tax: exempting health care plans protected by collective bargaining agreements. That means union plans that cross the $23,000 threshold won't be taxed.

As I first reported yesterday, one idea gaining traction in negotiations between Congressional leaders, union officials, and the White House is that collectively bargained benefit plans could be exempted from the tax. According to Rep. Robert Andrews (D-NJ), who chairs the health subcommittee of the House Education and Labor Committee, that could be enough to build a majority for health care reform.

"It would be a way to lessen impact of the so-called excise tax," Andrews said. "I think we could build a consensus around that idea--a majority around that idea."

If unions take this deal, it's a sell-out of epic proportions. I'm hard pressed to think of a deal unions could cut in health care that would cause more long-term damage to not just the credibility of the labor movement, but to the middle class itself.

The excise tax is a tax on more expensive insurance plans that is supposed to fund part of health care reform. It was branded the "Cadillac tax," but that distorts the reality of who it will effect. This isn't a tax on the rich; it's a tax on the middle class, the old, and the sick with more expensive plans. And a good chunk of those plans are negotiated under collective bargaining agreements, i.e. under union contracts.

Richard Trumka laid down a line and said the AFL-CIO would not support a plan without a public option. While other labor groups haven't been as forceful, progressives have looked to the AFL-CIO as the most defiant of the veal pen.

Presumably, in Monday's meeting at the White House, labor leaders made clear that the excise tax on their plans wouldn't fly, and that the Employee Free Choice Act would have to come up for a vote (and pass?) in a few months after health care. And I'm sure they got the same assurance they've got from Rahm and Reid for more than a year on labor law reform: be patient, it will come up and pass.

If unions take this "deal," if the labor movement decides to fold and exempt themselves from the excise tax, they fulfill one of the worst of stereotypes of labor unions: blind self interest. By abandoning the nonunion middle class and protecting only their own, the labor movement is throwing any hope of future relevancy out the window.

The ideal of unions is to organize the unorganized, to protect the unprotected. Sure, unions should fight for their members, no question. But in the biggest public policy and political fight of a generation, unions simply cannot exempt their members from the dangerous excise tax and call it a day.

And if Rahm does come through on his end of the deal -- a vote on the Employee Free Choice Act -- expect unions to be very much on their own in that fight if they sell out on health care.